Member Info for SeaTank8300

The stream of incremental wins from SEPL continues

It's a complicated JV to model, honestly. I laid out some detail a while back but recall from memory ANOH is around 10k bpd of condensate to Seplat, then there are gas sales on top of that. The JV needs to build up a certain amount of cash flow and pay down some debt before it can start paying dividends, around 12 months operating, but once it does then the cash flow can upstream to Seplat, and we've been guided that this will very likely then get paid to shareholders in raised dividend. Depending on oil price and uptime, the free cash flow will be between $50m and $120m annually. At $60 oil, I think $50m is a ballpark. At $90 oil, more like $120m, I think.

Hi herminator, I believe it is around 8% in total via Shebah and also directly held, so quite a slug, but it will be wonderful to have that move to free float. Grok AI suggests could be as soon as January to March next year. I really don't know, but nothing moves fast in Nigeria and Orjiako will appeal if he can.

The share price weakness could be in anticipation of the sale of Shebah's stake in the company, but it seems unlikely given timing is unknown (it could be well into next year). There does not appear to be a good reason, but this is a thinly traded share after all. I'm not concerned, enjoying the dividends. If I did not own so much already I would buy some more.

A big technical constraint to the share price and valuation remains the low traded liquidity, so it would be nice to see these lower quality and of debatable value original shareholders sell down, forced to or not, namely ABC Orjiako and MPI

I sense a lot of small shareholders here exited thinking this had run its course. Oh no, not by far. But there is still time to hop back on.

I note that there are some big price targets on the street now, Canaccord Genuity at 550p and Investec at 534p in particular. It really does feel like 400p is now a realistic expectation with a 12 month view. I've explained why 350p is a very attractive level for this equity based on historical trading multiples alone (i.e. backward looking valuation levels). IMO 400p would be fairer, and 500p+ can certainly be justified.

Numbers look great

Thought I would mention that I'm also a shareholder in GTCO LN, the leading bank in Nigeria, dual listed on the LSE. The management team are fabulous and have done a sterling job over very many years and are 100% trustworthy. ROE is >30% and the bank trades on a valuation multiple of around 1.0x with a dividend yield of >10%. I would go as far as to say that SEPL and GTCO are the two blue chip stocks in Nigeria.

Those interested in the POO and where it might be going should take a read/listen of this:

Goehring & Rozencwajg: "From Relic to Renaissance: Why Oil’s Repricing Could Define the Next Decade"

Google it

I find the terms of this fundraising quite acceptable as the timing and quantum of drawdown lies with ALL, and the funding package provides plenty of financial firepower to see through the final ratification and any changes in fiscal terms. This could take another 12 months but I suspect we won't be testing recent lows again with this financing in place.

Some colour about how much published earnings expectations have shifted these past few months, especially the last month.

Market consensus EBITDA for 2026 was still as low as $400m in January this year. By June, expectations for 2026 had risen to $1.08bn, while forecasts for 2027 started appearing with consensus level at $1.08bn. Obviously much too low.

Fast forward just three months, consensus EBITDA for 2026 is now at $1.44bn and for 2027 at $1.60bn. I can't see through to Canacord's forecast, which I suspect is at the high end, however Citi's forecast for 2027 is $1.5bn, which assumes US$60/bbl (2024, real), i.e. on the low side

Using the 2027 EBITDA figure, the 2-year forward EV/EBITDA multiple is 2.14x. This compares to an average 2-year forward EV/EBITDA multiple of 2.47x since 1 Jan 2018. This makes no sense at all. SEPL should be at a clear premium above its long term average multiple, for very many obvious reasons.

At the very least, we have 15% upside from 301.50p to bring us in-line with the long term average: that's 348p

As I said before, a fair premium to the long term average is obviously warranted. You choose what that might be.

Only a matter of time before we are through the 300p level. The share might consolidate a few days but I suspect institutional buyers are circling to board the train so the share will continue to notch upwards. They all know that even 350p is a fair and still undervalued price.

My posts are often cut short by lse.co.uk

Very irritating!

We update our model on the back of Seplat’s ambitious strategic outlook. We see volume growth of c9% p.a this decade and reaching >200kboepd by 2030, which is a >60% increase on our previous forecasts. Alongside expected gains in operating and tax efficiency (higher capital shield from higher investments) we see a further boost to underlying earnings. Our near term earnings move up by 15% (’25-26E avg) and medium term earnings by c80% (27-30E avg) as drilling accelerates and fiscal tailwinds come through. We also take the opportunity to adjust our

NAV based model to a DCF-based model to 2030 and terminal growth defined by risked reserve assumptions (our discount rate of 12.5% is unchanged). Taken together this sees our TP increase to 415p (from 325p previously). Whilst Seplat has outperformed YTD, a low multiple (

Yes Trek, the momentum is strong here, underpinned by solid and improving fundamentals, which is the best.

The share price should continue to squeeze higher, as any prospective institutional buyer will have to prise away shares from a long term shareholder who knows how undervalued this stock is; there is no natural pool of liquidity here to take from. There is also a wide margin of safety, regarding price level, for any new incoming institution, IMO, since the valuation multiple is below historical levels despite the much improved fundamentals. With the five year plan so transparently laid out, I can only see this momentum continuing some distance from here.

Note Canaccord Genuity increased its price target for SEPL from 465p to 550p today. The market is still well behind the curve on this. Even a 350p level would indicate 60% upside to Canaccord's target price. IMO 350p is easily achievable in the short term as it would bring the valuation multiple to a "normal" level, that's all. Beyond 350p will take steady delivery on their targets or higher POO, i.e. more of a 2026 likelihood.

Just to complete my point about the comparison with AkerBP etc, a simple valuation multiple comparison is no longer enough; you need to start thinking about this business in terms of reserve life (30-40 years) and growth of midstream gas contribution on long term fixed price contracts. Both of these drive a higher multiple than in the past. The business is also a very diversified one now, operationally speaking; literally in terms of number of reserves, wells and platforms etc, also in terms of low risk geology. And note the market is slowly smelling the coffee regarding the business-friendly government and improving macro: look at the currency moves despite the rate of inflation, and look at how much inflation has come down (35% to 20% in 12 months). Anyway, despite all of the above, SEPL is trading on 1.9x 2026 EV/EBITDA, versus its seven-year average of 2.5x two-year forward EV/EBITDA. It should be trading at a premium to its historic average. How much premium? At least 20%, perhaps 50%; that is up to individual judgement. The story remains in its early chapters, much to play out yet.

My message wasn't fully posted. I was going to finish....whereas these two comparables are

My message wasn't fully posted. I was going to finish....whereas these two comparables are

My message wasn't fully posted. I was going to finish....whereas these two comparables are